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DE RUEHBJ #2053/01 2010657
ZNR UUUUU ZZH POL DOE FCS SCI
P 200657Z JUL 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 5274
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
INFO RUEHOO/CHINA POSTS COLLECTIVE PRIORITY
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUEAEPA/HQ EPA WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
ECON

UNCLAS SECTION 01 OF 02 BEIJING 002053 
 
SENSITIVE 
SIPDIS 
 
STATE PASS FOR USTR 
DEPT OF COMMERCE FOR KASOFF AND MELCHER 
 
E.O. 12958:  N/A 
TAGS: ENRG KGHG ECON SENV PGOV CH
SUBJECT: CHU AND LOCKE TALK CLEAN ENERGY WITH CHINA'S STATE GRID 
 
REF: BEIJING 2044 
 
(U) This cable is Sensitive but Unclassified (SBU) and for official 
use only.  Not for transmission outside USG channels. 
 
¶1. (SBU) SUMMARY.  Secretary of Energy Steven Chu and Secretary of 
Commerce Gary Locke met with State Grid President Liu Zhenya on July 
16 to discuss clean energy.  State Grid is China's largest 
transmission and distribution company, serving nearly one billion 
people.  The company has pioneered ultra-high voltage (UHV) 
transmission technologies, and has plans for a UHV AC/DC hybrid 
network nationwide.  Such technology is essential to link China's 
remote energy resources with its consumption centers in eastern and 
central China.  China has an aggressive plan to develop clean 
energy, which resulted in a doubling of wind generation capacity in 
2008 alone.  State Grid's three-stage plan to implement a robust, 
smart grid will help compensate for the variability of renewable 
generating sources.  China's ambitious plans call for renewable 
energy to account for 35 percent of total generated power by 2020. 
Liu emphasized they need to work with the government to strengthen 
public understanding of climate change and build a base for burden 
sharing of the higher costs of wind and solar energy compared to 
fossil energies.  Liu, Chu and Locke all expressed an interest to 
continue to share different approaches to clean energy.  END 
SUMMARY 
 
¶2. (SBU) Secretary of Energy Steven Chu and Secretary of Commerce 
Gary Locke met State Grid President Liu Zhenya on July 16 in 
Beijing.  President Liu welcomed the two Secretaries to State Grid 
headquarters and thanked Secretary Chu for the warm welcome he had 
given him during Liu's recent trip to the U.S. in April of this 
year.  In particular, he appreciated the Secretary's thoughts on 
clean energy and smart grid development.  Liu then asked Ms. Cheng 
Mengrong, Deputy Director General of State Grid's International 
Cooperation Department, to provide an overview of the company and 
its efforts to create a "smart grid." 
 
¶3. (SBU) Ms. Cheng explained that State Grid was China's largest 
electric power transmission and distribution company in China.  They 
serve 26 of 31 provinces and over 1 billion people.  With revenue of 
USD 164 billion, the company ranks number 15 in Fortune's Global 500 
list, and is the world's largest utility company.  In particular, 
the company has been a world leader in ultra-high voltage (UHV) 
transmission, with plans to implement a nationwide UHV AC/DC hybrid 
network power transmission system covering distances of up to 2,000 
kilometers. 
 
¶4. (SBU) Ms. Cheng explained that UHV transmission would be 
essential in meeting the anticipated doubling of power demand and 
generating capacity by 2020.  China's energy resources are 
concentrated in the north and northeast (coal), the northwest (wind 
and solar), and the southwest (hydro), yet two-thirds of demand is 
concentrated in east and central China.  This is why China initially 
focused more on improving their power transmission than on the 
distribution systems.  State Grid completed a UHV AC line in central 
China, which involved the company's own technology and standards, 
and it is constructing an 800kV UHV DC line from Sichuan to 
Shanghai.  China's pioneering work includes test facilities that 
have broken the world record for UHV AC transmission. 
 
¶5. (SBU) State Grid has also recognized on the need to improve on 
the transmission needs of renewable energy.  China has been very 
active in developing wind generation in northeast and northwest 
China, doubling installed wind power capacity in 2008 alone to over 
12,000 MW.  But weak local grids and the variability of renewable 
power generation have made it difficult to transmit bulk power to 
consuming areas.  Thus, China began research and implementation of a 
"Unified, Strong, Smart Grid," with a three-stage plan to implement 
a smart grid in the next ten years.  By 2020, China's installed base 
of clean energy will reach 570 GW, accounting for 35 percent of 
total generation capacity.  State Grid estimates this will save 470 
million tons of coal consumption and 1.38 billion tons of CO2 
emissions. 
 
¶6. (SBU) Responding to a question from Secretary Chu, President Liu 
noted that China had a three-part strategy to balance the higher 
costs of clean energy with these objectives.  First, China was 
pioneering long distance UHV transmission technologies in 
conjunction with the development of clean energy; second, they have 
redoubled efforts to reduce transmission and generation costs for 
clean energy; and third, they have good government support and have 
 
BEIJING 00002053  002 OF 002 
 
 
actively worked to raise the awareness of climate change affects to 
gain end-users willingness to burden share the increased costs of 
renewable energies.  Liu continued, "Of course no one wants to pay 
more than they have to for energy, but if you explain the impacts of 
climate change and global warming, they can see how it will harm 
each family." 
 
¶7. (SBU) Secretary Chu observed that with the variable nature of 
many renewable power sources, a smart grid must be able to switch 
vast amounts of power for "when the wind stops blowing."  If clean 
energy comprises over 20 to 30 percent of the generating capacity, a 
provider will also need large-scale energy storage.  Like China, 
many renewable energy resources in the U.S. are not located near 
population centers.  President Liu agreed, and noted that was why 
China was working so hard on the development of the "Unified, 
Strong, Smart Grid" concept. 
 
¶8. (SBU) Secretary of Commerce Gary Locke congratulated State Grid 
on its technical achievement to date, and for sharing the progress 
they had made.  He noted that the U.S. was also embarking on the 
development of smart grids, and this was one of President Obama's 
priorities.  In the U.S., efforts were being made to allow consumers 
to interact with their power provider, such as using the internet to 
program high energy consuming appliances to run when the rates are 
the lowest.  Locke said he also saw great potential for UHV 
transmission technologies in the U.S., and looked forward to greater 
cooperation on the two countries' respective approaches to clean 
energy. 
 
¶9. (SBU) President Liu noted that China had also begun efforts on 
the consuming side, pointing out initiatives with consumer 
electronics companies, such as Haier, and plans for hybrid vehicle 
charging stations in some cities.  Liu thanked Chu and Locke for 
their visit, and suggested further cooperation, inviting the U.S. to 
participate in State Grid's clean energy conference in November. 
 
¶10. (U) Secretary Chu and Secretary Locke's delegations did not have 
the opportunity to clear this message before departing. 
 
GOLDBERG